The Corona Virus – more specifically known as COVID-19 – has taken the world by a storm. Bringing economies, businesses, and personal lives to a standstill, it has spread on an exponential scale that is currently devastating healthcare and populations globally. Needless to say, it has had an effect on almost all aspects of society. In the wake of businesses shutting down, and lockdowns being put in place, a lot of compliance relaxations have been introduced for companies. Patent lawyer Rahul Dev and the team have taken a look at them for you to better understand how your legal obligations might now change given the current situation.
Ernst & Young, a global business, has put out a risk management memo for its employees to better understand compliance laws, and what risks they might face in contracts where they cannot use the force majeure clause. Force majeure is close in most contracts that prevent obligations in the case of natural forces of disaster or obstruction (such as war, famine, earthquakes, and even pandemics).
The Security and Exchange Board of India (SEBI) also put out a notice about temporarily relaxed compliance requirements for its listed businesses. These included the extension in dates for compliance certificate submissions, statements of investor complaints, secretarial audits, corporate governance report submissions, shareholding patterns, annual financial results, and more. There was also an extension in the meetings of board committees, such as risk management and stakeholder relationship committees.
Of course, this does not prevent disruptions in the day to day to operations of any business. Lockdowns and curfews have caused an obstacle for supply chains, the capacity of production, as well as material and financial constraints. Most companies have been advised to look over their vendor contracts thoroughly and provide disclosures to partners in case of delays or inability to comply with contracts during this time period.
The Ministry of Corporate Affairs has also announced some corporate relaxations in compliance, in order to make this difficult time easier for companies. No additional fees will be charged for late filing during a moratorium period, and auditor’s reports shall be made applicable for the financial year of 2020-21 instead of 2019-20. There is also a six-month extension for new businesses to file declarations of commencement. The MCA also shared that any expense towards fighting COVID-19 will be considered as a CSR fund activity.